Production Plunged At The World’s Largest Primary Silver Mine

The largest primary silver mine in the world experienced a huge decline in its production due to falling ore grades.  The Cannington Mine, now run by South 32 Ltd., suffered a huge drop in its silver production during its 1H 2017 reporting time-period.  Some companies, such as South 32, start their fiscal new year in July.  BHP Billiton, who owned the Cannington mine since its start-up in 1997, spun it off to South 32 back in 2015.

According to South 32’s production report, the Cannington Mine saw its silver production drop by a staggering 27% 1H 2017 versus 1H 2016:

Silver production at the Cannington Mine declined from 11.9 million oz (Moz) 1H 2016 to 8.7 Moz 1H 2017.  Basically, these figures are comparing production from July-Dec 2015 versus July-Dec 2016.  Again, the latter reporting period is stated as the first half of 2017 (1H 2017).

Regardless, this is a huge drop in silver production from the world’s largest primary silver mine located in Australia.  Here is the actual table from the South 32 report:

The reason for the big drop in silver production at Cannington was due to the huge decline in the silver ore grade at the mine.  The average silver ore grade fell from 266 grams per tonne (g/t) 1H 2016 to 198 g/t in the 1H 2017.    Falling silver ore grades are nothing new for Cannington, as it has been going on for quite some time.  The world’s largest primary silver mine once produced silver at an average ore grade of 636 g/t… more than three times its current silver grade.

Here we can see that Cannington’s average silver ore grade declined from 636 g/t in 2000, to a low of 255 g/t in 2016.  During its peak year in 2005, Cannington produced 44 Moz of silver at an average ore grade of 515 g/t.   This one single mine produced more than half a billion ounces (558 Moz) of silver since 2000.

The chart above was one of 48 in published in my THE SILVER CHART REPORT.  If you haven’t checked out the report, there is a lot of excellent information on the Silver Market and Industry not found in any other single publication on the internet.

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  • Silver Production
  • Mining & Falling Ore Grades
  • Official Silver Coin Sales
  • Silver Price
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Even though production has continued to decline at Cannington, it was still the largest primary silver mine in 2015:

This table from the Silver Institute, shows that the Cannington Mine ranked second in 2015, behind Polymetal’s Dukat Mine in Russia.  However, revised data shows that the Cannington Mine actually produced 22.6 Moz of silver in 2015, not 22.2 Moz.  So, when the Silver Institute publishes their updated primary silver mine data for 2016, they will put Cannington in the number one spot for 2015.

(Cannington Mine, North-west Queensland, Australia)

That being said, Cannington will fall to the number two spot in 2016, when all the data is finally released.  According to the data released by the mining companies, here are the production results for 2016:

Top Four Primary Silver Mine Production In 2016:

1) Fresnillo’s Saucito Mine = 21.9 Moz

2) South 32’s Cannington Mine = 21.4 Moz

3) Tahoe’s Escobal Mine = 21.3 Moz

4) Polymetal’s Dukat = 19.3 Moz

Regardless, to see silver production fall 27% at the Cannington is quite amazing when we know its tremendous production history.  South 23 states that the Cannington Mine will extract higher grade silver ores in the second half of the year, but production is estimated to only reach 19 Moz for the year.

When U.S. and global oil production starts to decline in a BIG WAY, silver production will feel it the most.  Why?  Because by-product silver supply from copper, zinc and lead production will fall precipitously as base metal demand plummets during the next financial and economic crisis.

The best time invest in physical silver is before supply evaporates or before its price or value heads towards Jupiter.

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14 Comments on "Production Plunged At The World’s Largest Primary Silver Mine"

  1. While the masses look at stocks and listen to GDP boosting comments out of fiat lala-land, fundamentals are imploding rapidly: Cement production, ore grades, debt ratios, car sales, dry bulk, npl’s and politics.

  2. http://www.zerohedge.com/news/2017-02-09/bundesbank-has-completed-gold-repatriation-new-york-fed-three-years-ahead-schedule

    “Why this unexpected scramble to repatraite so much gold 3 years ahead of the 2020 stated schedule, remains a mystery.”

  3. Diogenes Shrugged | February 9, 2017 at 12:55 pm | Reply

    I suspect the ore grades you mentioned should be expressed in units of grams per tonne, not grams per ton. There is a significant difference. Importantly, Australia is on the metric system.

    Somebody here recently said something about an ounce being a little over 28 grams. Avoirdupois ounces in America are not the same as the Troy ounces used for precious metals. If precious metals prices increase according to your predictions, competence with systems of measurement should become increasingly important to your readers.

    • Diogenes Shrugged,

      Yes, you are correct. I write so many articles and use so many different labels to describe different volumes or measurements, I tend to overlook the minute details.

      You will notice that the charts all show grams per tonne. I just wrote grams per ton once in the article and now have made the edit to grams per tonne.

      steve

  4. Steve,
    thanks for the article.

    Cannington is an older mine. however, Tahoe’s mine is new. the production was ‘replaced’. I think BHP spun Cannington out because they see the writing on the wall here.

    Silver mining is analogous to oil wells. Cannington’s production has dropped over the years because they had to mine deeper and remove more overburden and lower grade. all this means higher mining costs and less profit. Eventually Cannington will be shut down because of high costs. After shutdown, there will likely be lots of silver still down in the ground. However, it will be too expensive to recover. Higher energy costs will accelerate all these factors.

    Your article did not show the tonnes milled, the amount of overburden removed, the depth of the current deposit, or the metallurical extraction efficiency. These are critical factors.

    I suspect Cannington has some years left, but it is not going to be what it was.

    • eddy,

      You bring up several good points. However, my article was not to instruct on the details of depletion in the primary silver mining industry, rather… it was to just share news.

      But, if you want to know about material mined or tonnes milled, you can read the chart that shows from 2000-2016, Cannington produced 558 Moz of silver by processing 48.6 million tonnes of ore.

      Basically, this short article was to highlight what is going on in the primary silver mining industry. All the large primary silver mines are depleting.

      Sometimes, it’s just simply… NEWS.

      steve

  5. Cannington mines at depths of 600 meters and processes 3.4 million tones of ore. It had a mine life iof 25 years. And has at least 5 more years of life. Clearly it on the downswing. The fresillo mine looks like it is declining, too.
    A big issue is can these big producers be replaced? It not clear to me that they can be.

  6. THANK YOU, Steve!! Your information is both GREATLY and GRACIOUSLY appreciated–especially for those of us trying to get a handle on what is REALLY happening outside mainstream media sources!!

  7. Thanks steeve, your blog is a precursor in the matter

  8. Hi Steve.

    What about First Majestic? They produced 16 Moz of silver in 2015 and 18.7 Moz in 2016.
    That should qualify them as a leading silver producer.

    Here is a link to their historic production http://www.firstmajestic.com/news/index.php

    I like the connections you make to mining and to price of oil, the falling profitability of the major energy companies. I agree with you overall thesis, declining energy availability will eventually lead to much higher PM prices.

    Thanks for all the great work you do.

    • TR Mist,

      Yes, you are correct. First Majestic did produce record production in 2016. However, this was from several mines. The Cannington Mine produced 22.6 Moz all by itself in 2015. Just one primary silver mine.

      steve

  9. Hi Steve,
    Thanks for another great post. From eyeballing the data in the leading primary silver mines table it shows 2015 silver production in total is up over 5 million oz compared to 2014 for these 15 mines. Be interesting to see if 2016 shows a drop in production to support the peak production narrative. Of course that view is quite simplistic when grading is not taken into account. Do you have a view on how producers who can / are high grading are accelerating depletion?

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